Share this story:FacebookTwitterPinterestLinkedinemailGet an unsecured loan you can use for any purpose you wish. We have access to loans of up to £25,000 and as little as £1000. And the great thing about personal loans is that you don’t have to own your home nor have perfect credit.

Share this story:FacebookTwitterPinterestLinkedinemailIf you own your home then a secured homeowner loan allows you to borrow against the equity in your home. Often you can borrow more and at lower rates than with a unsecured personal loan. The average loan amount borrowed is around £25k to £30k, but we have

Share this story:FacebookTwitterPinterestLinkedinemailConsider a guarantor loan if you want an unsecured loan but have struggled to obtain one from mainstream lenders. Borrow up to £12,000 for 1 to 7 years.

Share this story:FacebookTwitterPinterestLinkedinemailIf you need a small cash loan and want a personal service then consider a doorstep loan. This type of home credit comes from highly reputable lenders and does not require you to have a bank account.

Share this story:FacebookTwitterPinterestLinkedinemailMillions of people in the UK have a credit problem of one form or another. You are not alone. We have a range of loan options that could help. Discover your options now!

Share this story:FacebookTwitterPinterestLinkedinemailIf you are looking to replace your vehicle then specialist finance may be the solution. Explore these options and how they work. Apply to discover your loan options.

How to release equity to pay for home improvements

While even getting on the property ladder is a tough task for younger generations, many over 50s are already living mortgage free. Property is considered the wisest of investments. In fact, according to a report by Consumer Intelligence, one in three people has given up on a pension to fund retirement, relying on investing in property instead. However, the most pressing question for many property owners is what happens if you need to access some of the cash you’ve poured into bricks and mortar. How can you turn that investment liquid without selling? This is where equity release comes in.

“My property requires repairs or upgrades but I’m not sure how to pay for it.”

“I’d like to be able to give my son a contribution to a deposit for a flat but I don’t have much in the way of savings.”

“I’ve worked hard to pay off my mortgage but now don’t have much cash with which to enjoy my retirement.”

There are many reasons why people consider equity release. It’s increasingly become a more popular option for creating a way to make retirement more comfortable – or to support the generations coming up behind. In the second half of 2016, £1.24 billion of housing wealth was accessed via equity release. The spring 2017 Equity Release Market Report from the Equity Release Council found that the equity release market in the UK grew 34% between 2015 and 2016. That’s double the rate of growth compared to 2014 – 2015. For mortgage free homeowners without other cash reserves it’s a thoroughly appealing option.

How to release equity: The lifetime mortgage

This is by far the most popular option for equity release. According to the Equity Release Council, 27,534 new plans were agreed in 2016 alone. This is an option for any homeowner over the age of 55 and allows borrowing up to 60% of the value of the home. The money can be released as a single payment or broken down into a number of payments over a period of time.

The lifetime mortgage behaves very much like a normal mortgage with interest due on whatever value has been released from the property via the scheme. However there are differences, the most important of which is that you can choose not to make a monthly payment. While that could trigger a repossession with a regular mortgage, that’s not the case with a lifetime mortgage. Instead, the interest rolls up and is added to the loan. The entire amount is repaid either on death or when the homeowner moves into residential care.

How to release equity: A home reversion

You need to be older to access this type of equity release (60 – 65). It works so that you sell a part of the property to the equity release provider. In return you get:

A cash lump sum

The right to continue living in your home until death

The right to live rent free during that time

No interest to pay on the cash lump sum

Although a home reversion doesn’t involve any interest payments, valuing the portion of the home sold to an equity release provider is slightly different to a regular market valuation. Usually only 20 – 60% of the market value of that part of the property is allocated. So, for example a homeowner selling a £200,000 property under a home reversion would get £20,000 – £60,000, rather than the £100,00 that the proportion of the property would be worth if it was sold on the open market.

Remortgages & Secured Loans

If you no longer have a mortgage then perhaps the most straightforward way of accessing the equity in your home is to do a simple remortage – it doesn’t have to be for 25 years; you could pay it back faster if the sum you’ve borrowed is not considerable and you still have a reasonable income.

If you still have a mortgage but want to get at the equity that’s built up then you could remortgage or you could use a secured loan – secured loans have a number of advantages, so they are worth considering. Neither of these options would have been open to older people even just a few years ago, but lenders are acknowledging that has been unnecessary age discrimination and are starting to relax the old rules.

Equity release for debts

According to equity release specialists Responsible Equity Release, home improvements or passing on early inheritance are not the only purposes for which equity release is being used. Paying off debts is another way in which many people are using equity accumulated in a property to free up cash for other things. In particular, those who haven’t quite reached a state of being mortgage free find it useful to turn to equity release to pay off the last of mortgage debt. This not only removes the need to consider monthly repayments that put a home at risk if missed but also releases the cash that would have been used to cover those payments for better things.

More and more people are starting to consider equity release as an option for a better funded retirement. From home improvements, to travel and giving money to those you love, it provides a simple way to create cash flow from your property value.

tags

Author Alex Hartley

I'm keen to help you make more of your money - making it stretch further and finding the best ways for you to invest it to help grow it over time. When not preaching good money behaviour you'll find me practising it at home with my family and other animals!

IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY

MISSING PAYMENTS ON A LOAN WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE

Correspondence Address: PO Box 414, Reigate, Surrey, RH2 2DN.

Solution Loans is a licensed credit broker and not a lender. Nothing on this website constitutes financial advice. If you need financial advice you should speak to a qualified financial advisor. This website provides information only. The choice of product is yours and your alone. As a broker we process the information you provide us and we may pass this onto our trusted third party lenders and brokers. All credit is subject to you being a UK resident, aged 18 or over and your personal circumstances. All lenders operate responsible lending policies and as such credit is subject to affordability. § Visit how we earn revenue for more information.